April 17 (Bloomberg) -- UnitedHealth Group Inc., the
biggest U.S. health insurer, said it may lose members in New
York as the market becomes more crowded, driving down prices.

“We believe several carriers there, including new
entrants, are pricing well below cost and at what we would view
as unsustainable pricing levels,” said Chief Executive Officer
Stephen Hemsley in a conference call today. “If this climate
continues, we could see some further pressure on risk-based
membership beyond the ranges we anticipated this year.”

Hemsley also said UnitedHealth may boost participation in
public insurance exchanges set up under Obamacare. New York is
now one of just five states where the insurer is involved an
exchange. In comparison, WellPoint, the nation’s second largest
health plan, is on 14 state exchanges.

Shares of Minnetonka, Minnesota-based UnitedHealth fell 3.1
percent to close at $75.78 in New York. The insurer has gained
26 percent in the past 12 months through today.

Net income in the quarter fell 7.8 percent to $1.1 billion,
or $1.10 a share, hurt by cuts to the Medicare Advantage program
for elderly and disabled Americans. Unitedhealth, the first
insurer to report this quarter, is often a bellwether for
results from other health plans.

The intensified pricing competition in New York is unique
to the state as several competitors who previously left the
marketplace re-entered in January, Gail Boudreaux, an executive
vice president, said on the call. Nonetheless, the company will
“stay very disciplined in our pricing,” she said.

New York is “one of the larger markets” for UnitedHealth,
according to spokesman Tyler Mason, who said in an e-mail that
the company doesn’t rank membership by states.

Public Exchanges

Hemsley did not elaborate on whether the price competition
was being seen more on or off the exchange.

While UnitedHealth has had a “modest footprint” on the
public exchanges set up by the Patient Protection and Affordable
Care Act, the company now “has a bias to increase that
participation in 2015,” said Boudreaux, without offering
specifics. “The size of the overall market is positive.”

Hemsley said it’s “still very, very early in the life of
the exchanges” and that UnitedHealth won’t have to make a final
decision until September.